Times are pretty crazy at the moment.

Consumers have hardly any spare cash to spend after ten consecutive months of steep interest rate rises. Yet you would never know it if you visited an airport, where queues are sneaking out of the terminal building.

These contradictions exist because of the stifled freedoms and pent-up savings Australians accumulated during the COVID-19 lockdowns.

Consumers just want to have some fun now.

Here are two ASX shares to buy that could benefit from this theme:

International travellers are back

Wilson Asset Management equities dealer Cooper Rogers likes the look of Experience Co Ltd (ASX: EXP).

“It’s benefiting from the recovery of the international traveller,” Rogers said on a Wilson video.

“We’re seeing increased spend on experiences, rather than goods, particularly from our Chinese and Indian travellers. We expect that to really bode well for Experience Co.”

The Experience Co share price has dropped 8.3% over the 12 months, but it has gained a handsome 14.6% since the start of 2023.

According to Cooper, there is one particular business unit that’s going gangbusters.

“The skydive division is the one you want to look at. It’s got massive operational leverage and with those increased numbers coming back, a lot of that incremental revenue is going to drop through the bottom line,” he said.

“EXP is a buy for us.”

Even back in 2021, in the midst of the COVID-19 delta lockdown, one expert predicted a boom two years later for this company.

“When international tourists return en masse, hopefully in 2023, it’s our belief that this lean, restructured business will be significantly more profitable than ever before,” said Forager Funds chief investment officer Steve Johnson.

Hungry for earnings upgrades

Another spending habit that endures even during tough economic conditions is fast food.

In fact, with consumers wanting to spend less eating out, the quick service restaurants become more appealing compared to fancy dining or even mid-price options.

This is why Wilson senior equity analyst Sam Koch considers Restaurant Brands New Zealand Ltd (ASX: RBD) a buy at the moment.

“If you’ve been to a KFC in NSW recently, you definitely would have been helping our holding.”

As well as the KFC brand, the franchisor operates Pizza Hut, Carl’s Jr and Taco Bell outlets across New Zealand, Australia and US Pacific territories.

“What we’re really attracted to is the fact that whilst input cost inflation has impacted their business…, we see that troughing and actually recovering from here,” said Koch.

“And you saw that in the last result.”

The stock fell off a cliff late last year, resulting in a current share price that’s less than half what it was six months ago.

This gives investors a buying opportunity, according to Koch.

“Earnings upgrades and deploying excess capital are the catalysts we’re looking for tos ee a re-rate back to the prior multiple that it traded on.”

The post Skydive then fried chicken: 2 ASX shares to party through an economic downturn appeared first on The Motley Fool Australia.

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More reading

• Why I think the Vanguard MSCI Index International Shares ETF (VGS) is a buy for any portfolio
• Analysts say these ASX dividend shares can boost your passive income
• Wilson reckons these 2 ASX 200 shares look ready for a massive 2023
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Experience Co. The Motley Fool Australia has positions in and has recommended Experience Co. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Vanguard MSCI Index International Shares ETF (ASX: VGS) is an exchange-traded fund (ETF) that offers investors a number of positive reasons to own it.

There are hundreds of ETFs out there to choose from, with more being launched every year. But this particular ETF is interesting to me because I think it offers pretty much everything that investors could want.

Sure, it may not be the best-performing ETF, but here are a number of reasons why the Vanguard MSCI Index International Shares ETF could do well from here.

Low fees

One of the main advantages of an index-based ETF is that it’s very cheap to run, allowing that low cost to be passed onto individual investors. There is a lot of competition in the ETF space to offer low fees, so it’s a bonus for investors to pay as low costs as possible.

Fees reduce the net returns of an investment, so whatever the gross return is, we’d want to see as much of that convert to a net return as possible. High-fee investment options can produce stronger returns, but it makes it easier for a low-fee fund to outperform.

The Vanguard MSCI Index International Shares ETF has an annual management fee of 0.18%. That’s higher than some of its peers but lower than many other ETFs.  

Total returns

Of course, we shouldn’t use past performance as a reliable indicator of future performance. But, I think it gives a useful understanding of the investment.

Since the start of the ETF in November 2014, the Vanguard MSCI Index International Shares ETF has produced an average return per annum of around 11% up to 28 February 2023. That’s not a Warren Buffett level of returns, but it would have enabled solid compounding of wealth for an investor.

While some of that came in the form of dividends, more than 8% of that per-annum figure came in the form of capital growth.

That growth has come about by being invested in some of the world’s largest and strongest businesses like Apple, Microsoft, Alphabet, Amazon.com, and Nvidia.

Diversification

I believe this ETF offers investors ample diversification. It’s generally a good idea not to have all of one’s eggs in one basket. Certainly, this ETF has many baskets of different varieties.

In terms of the number of businesses the fund holds, it owns more than 1,470 names in its portfolio.

Those businesses come from a number of different countries including the US, Japan, the UK, France, Canada, Switzerland, Germany, the Netherlands, Sweden, Denmark, Spain, and so on. Many major developed countries are represented.

It’s also diversified across sectors. While its largest allocation (21.6%) is to the growth-focused IT sector, there are a number of other sectors with a weighting of at least 5%: financials (14.2%), healthcare (13.4%), consumer discretionary (10.9%), industrials (10.9%), consumer staples (7.6%), communication services (6.7%), and energy (5.2%).

Dividend income

I wouldn’t think of Vanguard MSCI Index International Shares ETF as a top idea for passive income. But, the yield could be considered good enough to satisfy investors looking for a combination of growth and dividends.

According to Vanguard, the ETF currently has a dividend yield of 2.1%. While that’s not a great yield these days with interest rates now a lot higher, it could be just enough to tick that income box.

The post Why I think the Vanguard MSCI Index International Shares ETF (VGS) is a buy for any portfolio appeared first on The Motley Fool Australia.

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More reading

• Invested $1,000 in the Vanguard MSCI Index International Shares ETF (VGS) in 2018? Here’s how much dividend income you’ve received
• Is right now a massive buying opportunity for the Vanguard MSCI Index International Shares ETF (VGS)?
• 3 ETFs for investors to buy and hold for a decade
• 2 excellent ETFs for ASX investors to buy now

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon.com, Apple, Microsoft, Nvidia, and Vanguard Msci Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet, Amazon.com, Apple, Nvidia, and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re looking for dividend shares to buy to boost your passive income, then you may want to look at the two listed below.

Here’s why analysts rate these ASX dividend shares highly:

South32 Ltd (ASX: S32)

The first ASX dividend share that could give your passive income a big boost is mining giant South32.

Citi is positive on the company and believes it could provide investors with very big dividend yields in the near term. It recently said:

1H FY23 profit of US$560m was better than expected. Importantly, FY23 prodn and cost guidance was maintained. FY24 prodn guidance points to modestly higher output in FY24. […] S32 now trades at 0.94x NPV vs RIO at 1.0x and FMG 1.3x. We raise our TP to $5.05 and stay Buy rated. We believe S32 has not yet run to full valuation levels trading on FY24E EV/EBITDA of 4x vs peers at >5x

As for dividends, the broker is forecasting fully franked dividends of 28 cents per share in FY 2023 and 32 cents per share in FY 2024. Based on the current South32 share price of $4.12, this will mean yields of 6.8% and 7.8%, respectively.

Citi has a buy rating and $5.05 price target on South32’s shares.

Woolworths Limited (ASX: WOW)

Another ASX dividend share that has been named as a buy is Woolworths.

It is the retail giant behind Woolworths supermarkets and Big W, among others.

Goldman Sachs is positive on the retailer due to its strong customer loyalty and omni-channel advantage. It explained:

We are Buy rated (on Conviction List) on the stock as we believe the business has one of the highest consumer stickiness and loyalty among peers, and hence has strong ability to drive market share gains via its omni-channel advantage, as well as pass through any cost inflation to protect its margins, beyond market expectations.

In respect to dividends, Goldman is forecasting fully franked dividends of $1.06 per share in FY 2023 and $1.14 per share in FY 2024. Based on the current Woolworths share price of $37.46, this will mean yields of 2.8% and 3%, respectively.

Goldman currently has a conviction buy rating and $41.00 price target on the company’s shares.

The post Analysts say these ASX dividend shares can boost your passive income appeared first on The Motley Fool Australia.

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More reading

• Want to boost your portfolio with ASX blue chips? Analysts say buy these shares
• Did you buy $10,000 of Woolworths shares in 2018? If so, here’s how much passive income you’ve banked
• Give yourself a passive income boost with these growing ASX 200 dividend shares: analysts
• ‘Increased confidence’: Alphinity reveals 2 ASX 200 shares it just bought
• ‘Increasing demand’: Expert picks 2 ASX 200 mining shares to buy (not BHP)

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Everyone loves a great turnaround story.

But it’s natural to love it just that little bit more if you saw it coming and bought ASX shares in the company before everyone else woke up to it.

Wilson Asset Management analysts have a couple of examples that they rate as a buy right now:

New boss set to turn this ship around

Boral Limited (ASX: BLD) has been around for almost 80 years, so the brand is pretty well known in Australia for its construction materials.

But Wilson senior equity analyst Sam Koch pointed out it’s struggled in recent times.

“It’s been plagued with a lot of operational inefficiencies over the last couple of years,” he said in a Wilson video.

Indeed the share price performance reflects this crisis, having halved since July 2021.

Koch would buy the stock now, as Boral is ready to put that period behind it.

“Their new CEO Vik Bansal, we think, is a great fit. He has the operational capability to deliver a turnaround plan.”

He added that the revival strategy should involve “decentralising accountability, decision-making, focusing on revitalising the network, and realising the inherent value within the property [assets]”.

“If you back out over a $1 billion in property from the valuation, it’s actually trading in line with the sector average.

“We believe there’s a materially better outlook for this business versus its peers.”

The investor day in May will provide more information about Bansal’s turnaround plans, which Koch believes could prove to be a stock price catalyst.

Former cash-burning tech company could be profitable very soon

Family security software Life360 Inc (ASX: 360) saw its share price shockingly freefall 81% in just seven months to June last year.

It was a prototypical victim of the market’s move away from cash-burning growth businesses as interest rates rose.

The Californian company acknowledged that message and embarked on a cost-cutting program, which the market has rewarded with a 97% rocket in its share price since 17 June.

Wilson senior equity analyst Shaun Weick rates it as a buy, noting the communications Life360 has sent to investors.

“They’ve issued very strong calendar year 2023 guidance,” he said.

“They’ve brought forward the point of profitability to the second quarter of this year, and that’s often a key catalyst for technology stocks driving a re-rating — particularly in this environment.”

Goldman Sachs analysts agree with Weick on Life360, this week setting a share price target of $7.85. This implies a more than 58% upside to the current levels.

The post Wilson reckons these 2 ASX 200 shares look ready for a massive 2023 appeared first on The Motley Fool Australia.

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More reading

• Buy these ASX 200 shares for 50%+ returns: Goldman Sachs
• Here are the top 10 ASX 200 shares today
• Goldman Sachs names 5 of the best ASX tech shares to buy now
• Leading brokers name 3 ASX shares to buy today
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Tony Yoo has positions in Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished a volatile week on a subdued note. The benchmark index edged 0.2% lower to 6,955.2 points.

Will the market be able to bounce back from this on Monday? Here are five things to watch:

ASX 200 expected to edge lower

The Australian share market looks set to start the week slightly in the red despite a solid finish to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day a modest 3 points lower this morning. On Wall Street, the Dow Jones was up 0.4%, the S&P 500 rose 0.55%, and the NASDAQ climbed 0.3%.

Oil prices fall

Energy shares such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a subdued start to the week after oil prices fell on Friday. According to Bloomberg, the WTI crude oil price was down 1% to US$69.26 a barrel and the Brent crude oil price fell 1.2% to US$74.99 a barrel. Concerns over the health of the banking sector were to blame.

Aristocrat Leisure shares are a buy

Aristocrat Leisure Limited (ASX: ALL) shares could be heading higher from here according to analysts at Morgans. A note reveals that its analysts have retained their add rating and $43.00 price target on the gaming technology company’s shares. It commented: “We’re optimistic about ALL’s long-term growth potential, given its superior capitalisation and strong ability to invest in the development of its land-based and digital gaming businesses.”

Gold price pulls back

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a soft start to the week after the gold price pulled back on Friday night. According to CNBC, the spot gold price fell 0.75% to $1,981.0 per ounce. The gold price continues to hover around the US$2,000 an ounce mark amid the banking crisis.

Dividends being paid

A couple of ASX 200 shares will be paying their latest dividends on Monday. These are appliance manufacturer Breville Group Ltd (ASX: BRG) and gold miner Gold Road Resources Ltd (ASX: GOR). The former is rewarding its shareholders with a fully franked 15 cents per share interim dividend.

The post 5 things to watch on the ASX 200 on Monday appeared first on The Motley Fool Australia.

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More reading

• For $1,000 in monthly passive income, buy 18,462 shares of this ASX 200 stock
• Here are the top 10 ASX 200 shares today
• Is the AFIC share price a standout investment right now?
• Brokers name 3 ASX shares to buy now
• Passive income hack: 3 simple steps to help you get rich and retire early

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

CSL Limited (ASX: CSL)

According to a note out of Macquarie, its analysts have retained their outperform rating and $340.00 price target on this biotherapeutics company’s shares. Macquarie is feeling positive about CSL’s outlook thanks to improving plasma collection yields. It expects this to boost its margins in the coming years. In addition, it highlights that CSL’s research and development pipeline should also be supportive. The CSL share price ended the week at $288.49.

New Hope Corporation Limited (ASX: NHC)

Another note out of Macquarie reveals that its analysts have retained their outperform rating and $6.00 price target on this coal miner’s shares. While New Hope’s half-year results and dividend fell short of expectations, the broker remains positive. Particularly given the strength of the Bengalla operation, its organic growth opportunities, and potential M&A activities. The New Hope share price was fetching $5.49 at the end of the week.

Nextdc Ltd (ASX: NXT)

Analysts at Citi have retained their buy rating on this data centre operator’s shares with an improved price target of $12.70. This follows a post-earnings season review of the tech sector by the broker. The good news is that Citi remains positive following the review. The broker revealed that it likes NextDC due to its strong revenue growth outlook, which is being supported by a combination of strong demand and inflation-linked contracts. The NextDC share price ended the week at $10.06.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

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• Want to boost your portfolio with ASX blue chips? Analysts say buy these shares
• Why is the New Hope share price up 9% this week?
• Do New Hope shares really pay a 17.6% dividend yield?
• Here’s how much I’d need to invest in New Hope shares to generate a $250 monthly income
• Here are the top 10 ASX 200 shares today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Whitehaven Coal Ltd (ASX: WHC) share price has crumpled by almost 27% since ticking over into 2023. Unfortunately, the disappointing showing puts the coal producer among some of the worst-performing ASX 200 shares on a year-to-date basis.

Shares in the Australian coal miner are still up 45% from where they were a year ago. However, shareholders have been taking their money and running amid a declining coal price.

Remarkably, the skyrocketing earnings and the falling share price have resulted in a price-to-earnings (P/E) ratio of 1.9 times. For context, the industry average for energy shares hovers around 6.6 times earnings.

So, could it be time to back the dump truck up and shovel this ASX 200 share into the portfolio?

Coal is the maker or the breaker

Mining and selling a commodity is a tough business. When it’s good, it’s great, and when it rains, it pours — that’s the cyclical nature of the industry. This is because the going price of the commodity — which is driven by supply and demand — largely determines the company’s profits.

It’s a dynamic that has worked in the favour of Whitehaven shareholders over the past year. The energy-dense commodity’s price leapt from around US$150 per tonne to US$450 per tonne while costs held steady. As a result, the income margin ballooned from basically nothing to more than 45%.

But now comes the rain…

Coal prices have retreated abruptly this year, dropping back to within the pre-2022 range. Meanwhile, the ASX 200 share revealed increasing costs in its latest half-year results. Those two factors combined likely mean thinner margins are inbound.

To worsen matters, by the company’s own admission, thermal coal demand is expected to fall from 2025 onwards. Though, Whitehaven Coal’s management is banking on a shortfall in supply to heave prices higher.

It seems the market is now questioning whether prices will bounce back to drive sustained shareholder returns.

Would I buy this ASX 200 share?

I’m unconvinced that renewable energy will replace fossil fuels in this decade. In 2021, clean energy sources accounted for 32.5% of Australia’s total electricity generation, increasing from 27.7% the prior year.

However, at the current rate, we could potentially see 80% of our total electricity demand sourced from renewables in 10 years. I’d expect this will weigh on Whitehaven’s sales for thermal coal, but metallurgical coal — used for steelmaking — might be sustained.

The other issue the company could face is rising costs. As of 16 February 2023, Whitehaven is guiding for the cost of coal to be between A$95 per tonne to A$102 per tonne. If coal prices were to continue to fall, margins would obviously come under pressure.

As shown above, analysts’ estimates (depicted as dots) suggest earnings declines could be on the horizon. By FY2025, net profits after tax (NPAT) could be $1,429 million, compared to $3,393 million for the 12 months ending 31 December 2022.

For the reasons above, I personally wouldn’t be a buyer of this ASX 200 share.

The post One of the most beaten-up ASX 200 shares of 2023 so far. Is it time to buy? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• 2 ASX 200 mining shares to buy with huge upside potential: analysts
• Expert tips 10% dividend yield and booming share price for this ASX 200 stock
• Why Atlantic Lithium, Life360, Neuren, and Whitehaven Coal shares are charging higher
• Analysts warn of future earnings downgrades for ASX 200 coal shares

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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When you’re trying to build a strong portfolio, having a few blue chips in there can be a good thing.

That’s because blue chips are typically large companies that have been operating for many years. They tend to have stable cash flows, strong business models, and experienced management teams.

Combined, this can make them lower risk options and a good foundation to build a portfolio around.

But which blue chip ASX 200 shares could be in the buy zone right now? Here are three that are rated as buys:

Cochlear Limited (ASX: COH)

The first ASX 200 blue chip share that could be a buy is Cochlear. It is one of the world’s leading hearing solutions companies. It has a portfolio of world class products, which have been developed through its significant annual investment in research and development. Thanks to this and its very strong position in a market benefiting from ageing populations, Cochlear has been tipped to continue its solid growth long into the future.

Goldman Sachs is bullish on Cochlear and has a buy rating and $265.00 price target on its shares.

CSL Limited (ASX: CSL)

Another ASX 200 blue chip share that has been rated as a buy is CSL. It is one of the world’s leading biotechnology companies, comprising the CSL Behring, CSL Vifor, and Seqirus businesses. It has been tipped for solid growth over the long term thanks to its world class product portfolio, strong demand for immunoglobulins, and its lucrative research and development pipeline.

Citi is a fan of the company and has a buy rating and $350.00 price target on its shares.

South32 Ltd (ASX: S32)

A final ASX 200 blue chip share to consider is South32. It is a mining company producing a diverse range of metals. This includes alumina, aluminium, bauxite, copper, energy and metallurgical coal, manganese, nickel, silver, and zinc. Thanks largely to its exposure to commodities that are vital to the clean energy transition, it has been tipped to generate significant free cash flow in the coming years.

Morgans is bullish on the miner and has an add rating and $5.60 price target on its shares.

The post Want to boost your portfolio with ASX blue chips? Analysts say buy these shares appeared first on The Motley Fool Australia.

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• Top brokers name 3 ASX shares to buy today
• Does the CSL share price really offer 22% upside right now?
• ‘Increasing demand’: Expert picks 2 ASX 200 mining shares to buy (not BHP)
• How I’d aim to retire rich enough to live on passive income from my ASX dividend shares
• Analysts say these ultra high quality blue chip ASX 200 shares are buys

Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and Cochlear. The Motley Fool Australia has recommended Cochlear. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Investing in ASX shares for passive income?

You may want to run your slide rule over the Betashares Australian Dividend Harvester Fund (ASX: HVST).

Here’s why.

High-yielding ASX share with instant diversification

As with most exchange-traded funds (ETFs), HVST provides investors diverse exposure with a single investment.

The ETF holds 40 to 60 different ASX shares at any given time.

Betashares Australian Dividend Harvester Fund’s top holdings by sector are in the financials sector (30%), the materials sector (24%) and healthcare (10%).

As at 28 February, its two biggest ASX shareholdings were BHP Group Ltd (ASX: BHP) at 12.5% and CSL Ltd (ASX: CSL) at 7.2%.

The ETF’s stated goal is to offer investors mostly franked, passive income that beats the net income yield of the broader ASX.

The portfolio is rebalanced every three months, aiming to provide the highest gross yield outcome. That’s part of what investors get for the 0.73% management fee.

And while most ASX dividend shares only make one or two payouts per year, HSVT makes its distributions every month.

That’s a welcome feature for investors looking to secure a regular monthly passive income stream.

As are the bank-busting yields.

The ETF’s 12-month distribution yield works out to 6.9%. The fund’s gross distribution yield over the 12 months was 9.6%, at an average franking level of 91.6%.

That’s a long way ahead of the higher end term deposit rates of around 4.5% currently. Though, investing in any ASX share, even a diversified ETF, does come with significantly more risk than putting your money in a term deposit.

HSVT’s most recent monthly dividend of 7.1 cents per share was paid on 16 March, franked at 78%.

When the time comes to sell the ETF, investors may gain or lose money on the share price moves, just as with any ASX shares.

As you can see in the chart below, the HSVT share price is down 1% in 2023, roughly in line with the S&P/ASX 200 Index (ASX: XJO).

The post Looking for monthly passive income from ASX shares? This ETF offers bank-busting yields appeared first on The Motley Fool Australia.

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More reading

• 3 ASX shares that will pay you dividends every single month
• Here’s how I would secure monthly dividends in the 2024 financial year with these ASX stocks
• Guess which ASX ETF pays dividends every month?
• Top ASX ETFs to buy in March 2023

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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At its core, deep value takes value investing to the extreme. The goal is to find investments — such as those among ASX shares — that are priced significantly below their intrinsic value.

Locating these diamonds in the rough is what helped the late Ben Graham (Warren Buffett’s mentor) achieve 17% annualised returns over more than 20 years.

In order to discover these deep-value companies, Graham would search for businesses trading at valuation multiples that were considered low. For example, companies with a price-to-earnings (P/E) ratio below 10 or a price-to-book (P/B) ratio below 1.

Curious to find some deep value on the local boards, I dug up three ASX shares that I’d consider extremely cheap right now.

Deeply discounted dividend-paying ASX shares

Adairs Ltd (ASX: ADH)

At a P/E of 7.1 times earnings, Adairs is a homewares and furnishings retailer that I believe is trading far below its intrinsic value.

At present, much of the retail sector is being cheaply valued due to the expected impacts on discretionary spending amid higher interest rates. However, it is unlikely that these suppressed multiples will last forever.

Adairs posted a 34% increase in sales for the first half of FY23. I believe Adairs can grow its sales at a 5% per annum clip over the next five years (at minimum) and maintain a net income margin of roughly 7% — which seems like little to ask.

Based on these figures and an improved P/E ratio of 12 times earnings, I estimate the market capitalisation to be in the ballpark of $690 million. That would be approximately double today’s market valuation.

Nick Scali Limited (ASX: NCK)

Much like Adairs, Nick Scali is another furniture retailer that is trading on a lower earnings multiple than its peers. This might lead investors to think that Nick Scali is a lesser company than others, but the numbers definitely don’t paint that picture.

In the first half, the sofa seller posted sales growth of 57.4% compared to the prior corresponding period. Furthermore, the group’s gross margins improved slightly to a magnificent 62%. It’s hard to think of Nick Scali as anything other than one of the best ASX retail shares on the market at the moment.

Going forward, I’m expecting sales growth to temper as the property market cools off. Though, if similar earnings can be sustained over the next five years, I’d personally estimate Nick Scali’s intrinsic value to be around $14.80 per share — 69% above its current valuation.

Macmahon Holdings Ltd (ASX: MAH)

Trading on a P/E ratio of 6 times earnings and a P/B of 0.5, this ASX share is possibly the deepest value on this list. Macmahon Holdings provides mining services to a diverse pool of clients across the world, including Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM).

The steep discount could be attributed to the cyclic nature of the mining industry. No one wants to be an investor when the boom is over. Though, Macmahon is involved in several mining contracts for copper and lithium — which are expected to enjoy prolonged demand due to the electrification trend.

As of 31 December 2022, the company had an order book of $5.6 billion and guided for $1.85 billion to $1.95 billion in revenue for FY23.

My conservative estimate for Macmahon’s valuation in five years would be around $540 million if it were to trade more in line with the industry average P/E ratio of 9 times. This would represent a 90% increase from the current valuation.

The post In search of deep value? I think these 3 ASX dividend shares could be a downright steal appeared first on The Motley Fool Australia.

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More reading

• Dividend yields over 10%! Cheap ASX shares I’d buy for passive income
• This ASX dividend share is projected to pay a yield of over 9% by 2025
• I hope to retire rich. That’s why I’m buying cheap ASX dividend shares right now
• I’d target just a handful of ASX shares to aim for a million!
• Why Adairs, Liontown, Qantas, and Synlait shares are dropping today

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs. The Motley Fool Australia has positions in and has recommended Adairs. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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